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Merrill Lynch downgraded Capstone Turbine (CPST
) to near-term accumulate from buy, and maintains long-term buy.
Analyst Sam Brothwell says while the company continues to ramp up production/sales, competition from incumbents such as
Caterpillar is stiff. He says the interest in the company's new technology is strong, but its adoption is proving slower than expected. He notes the product works, yet customers will stick to what they know until the company makes a more recognizable name for itself. He says Captsone's 60 kilowatt system is the company's sweet spot, and that interest in this should continue as the nation's power crisis plays out. Still, he thinks the company is very much a core energy holding.
Brothwell sees a $0.27 2001 loss, and $0.21 EPS for 2002.